WASHINGTON — President Putin insists those troops in Russian uniforms aren’t really Russians, that they’re Crimean nationalists. He says you can buy those uniforms in any store. And Putin said in his lengthy press conference with Russian reporters that he has no intention of annexing Crimea, and that the real Russian troops were pulled back after they completed what Putin maintains were pre-planned exercises.

It’s always risky to say definitively what Putin will do, but he’s clearly backed down from any direct military confrontation with Ukraine, or the West. The face-saving “off ramp” advanced by German Chancellor Angela Merkel envisions international observers assigned to Crimea to assure that the rights and privileges of the ethnic Russian population are protected although there’s no evidence that this population is endangered. But this is the kind of arrangement that greases the wheels of diplomacy.

The real reason Putin appears to have backed down is the Russian economy. In today’s inter-connected, inter-dependent world, currencies are no longer tied to the amount of gold a nation holds, and a nation’s public companies are traded around the globe. As a result, the fallout from Putin’s gambit was a crash in the value of the Russian ruble and a 10 percent sell off in the Russian stock market — the equivalent of the U.S. stock market dropping 1,600 points in a day.

We have a global economy today, and when the major industrialists in Russia saw what was happening, they leaned on Putin. No dictator can afford to ignore his moneyed class.

When those allegedly faux Russian troops moved into Crimea over the weekend, the politicians and the pundit class jumped to the conclusion that this was Hitler and the 1930’s all over again. Sen. John McCain, R-Ariz., was first to the microphone, calling President Obama “naïve” and “feckless.” Charges that Obama isn’t tough enough and that he was unprepared for Putin’s aggression dominated the media.

Yet nobody called for military force, not McCain or any of Obama’s many critics. Then, as the days passed and the situation “de-escalated,” to use the White House’s phrase, it became obvious that the solution is an economic one. The European Union is less eager to impose tough economic sanctions than the Obama administration, but by mid-week there was movement towards some punitive package to let Putin know that his behavior is not cost-free.

The rapid escalation and then de-escalation of the standoff in Crimea should be instructive to other leaders who might be tempted to misbehave in the future. If what unfolded over the last week holds up, it serves as a strong message to China in particular. With the world’s second largest economy and its economic tentacles in every continent, China has to consider the implications for its currency and its stock market should it venture beyond the bounds of international norms either militarily or with interventionist policies.

A jolt to the Russian ruble and stock market is what brought Putin to the negotiating table; the threat of sanctions will keep him there. For those who doubt Obama’s strength, let’s remember President Reagan won the Cold War without firing a shot because the Soviets could not keep up with America’s defense spending. Putin is a smart man, and a devious leader, and he won’t jeopardize his economy for Crimea, but he will keep things unsettled, if only just because he can.